The information age is upon us. The proliferation of computers has brought sweeping changes in the way our society lives, works, and interacts. For businesses, the information age presents tremendous new opportunities and challenges. On-line communications unite geographically dispersed resources and disseminate complex information with ever increasing speed and efficiency. In this fast-growing market place known as cyberspace, receiving and transmitting information in a timely and cost-effective manner is of immense importance. At the heart of cyberspace lies the Internet.
Formerly a little known resource available only to the military and a small community of academics, the Internet has in recent years become a mainstream commercial communication resource. The Internet provides a real-time, paper-free, cost-effective mode of communication and resource sharing through which sellers of goods and services can reach millions of potential customers. E-mail and remote access to computer servers are currently widely used tools for reaching computer literate potential customers. But the market place of cyberspace is in its infancy. On-line teleconferencing, interactive television, video web sites, virtual reality, and myriad other technological advances are sure to develop.
The participants in the Internet are a wide variety of machines, organizations, and individuals, all able to communicate and share information. Physically, the Internet is an interconnected collection of thousands of computer networks, tens of thousands of computers, and tens of millions of individual stations operated by end-users. The Internet works because all of these computers share compatible communication protocols and addressing schemes that make e-mail, remote resource access, file transferring, and file sharing possible throughout the system.
The backbone of the Internet is a group of networks forming an international grid of high-speed, high-capacity data communication lines interconnecting a number of massive computers that serve as large-scale processing points or nodes. These backbone networks are interconnected with each other through a plurality of interconnection points known as network access points. The backbone nodes are collectively responsible for capturing and sorting incoming information, routing information to its intended destination, and forwarding data between backbone nodes.
The Internet was originally used only for academic and governmental purposes. In recent years, however, the Internet has been opened to commercial traffic--and commercial traffic has boomed. In the United States, commercial access to the Internet may be obtained at tens of thousands of hosts located throughout the country. A host is a computer connected to the Internet and configured with Internet routing software. A host may be a massive super computer, a main-frame processing machine, a minicomputer, a workstation, or even a personal computer. Hosts serve three principal functions. First, they send and receive Internet communication traffic. Second, they provide the gateway between the Internet and end-users. And third, they provide web servers that operate as repositories of information and resources that may be accessed over the Internet. For example, these web servers provide "home pages" to be visited, files to be read or downloaded, applications to be shared, and the like.
The physical structure of Internet is therefore tremendously complex, but to the end-user it appears to be a virtually seamless network in which the computer on the desk next door may be accessed as easily as that of a commercial supplier in another city, or that of university in another country. To access any Internet site, an end-user need only transmit the site's universal resource locator (URL) created in accordance with the standardized Domain Name System (DNS). The Internet hosts and nodes respond to the URL by connecting the end-user's station with the Internet site associated with the requested URL.
At present, the operator of each Internet site is responsible for paying the cost of obtaining a communication channel with the Internet. Once an end-user establishes a communication channel with the Internet, connections may be made with other Internet sites by transmitting URLs in accordance with the DNS system. An Internet site may therefore be established by providing a host and obtaining a communication channel between that host and the Internet.
Although commercial users must now pay a fee to use the Internet, the Internet is immensely popular with commercial users and individuals, at least in part, because it is very cost effective. At present, each commercial user typically pays the cost of physically obtaining a connection to the Internet, plus a relatively modest monthly Internet connection fee based on the capacity of the connection and in some cases the actual data transfer volume. In general, no connect-time-based, destination-based, or other incremental charges are currently imposed for browsing, e-mail, and resource sharing. Thus, a dedicated connection to the Internet effectively serves as a flat-rate international browsing, messaging, and resource sharing service.
An Internet site may be connected to the Internet through a wide range of physical communication channels providing various levels of information carrying capacity. The minimum service available that gives the Internet site access to the full array of Internet services 24 hours-a-day is a single "dial-up" Internet communication channel typically costing about $15-30 per-month. Higher capacity communication channels are available at higher cost. For example, optical fiber, wireless, and leased telephone lines ranging from 56 kilo-bits-per-second to 1.544 mega-bits-per-second (T1) are typical options available to an Internet site. Internet access charges for these communication channels at present cost roughly $500-5,000 per month. In addition to these access charges, the operator of an Internet site must also pay the cost of obtaining a physical communication channel with the Internet.
Many Internet sites are operated by commercial suppliers that sell products and services. These commercial suppliers may use the Internet to cost-effectively communicate with existing and prospective consumers. To a commercial supplier, the cost of maintaining an Internet site is a cost of doing business, much like postage, electricity, and advertising. Indeed, the Internet may be one of the most cost-effective marketing resources available to a commercial entity.
Other Internet sites are points of presence operated by local access providers that, in turn, provide Internet access to millions of end-user Internet sites. Obtaining access through a local access provider is currently the least expensive way for an individual end-user to access the Internet. These points of presence therefore operate as gateways between the Internet sites of commercial suppliers and millions of end-users. A local access provider recovers the cost of its Internet communication channel and earns its profits through Internet access fees charged to its customers. For example, an local access provider may charge an end-user a flat rate of $25 per-month, or $5 per-month plus 5 cents per-connect-minute.
Between an individual end-user and a local access provider's point of presence lies a communications network, such as a telephone network, a cable television network, a wireless communications network, or the like. This communications network is typically operated by a for-profit enterprise. An end-user therefore pays a cost for using the communications network. In the United States, most homes and businesses are already connected to a telephone network. These telephone networks are therefore convenient options for end-users desiring communication channels with the Internet. Other communications networks, however, may equivalently be used to provide Internet access.
The economics of using a communications network, particularly the telephone network, is therefore an important factor in the operation of the Internet as a commercial resource. For an end-user lucky enough to have a local access provider's point of presence located within the same telephone exchange area, the Internet is only a local telephone call away. For other less fortunate end-users, long-distance telephone charges are incurred. For these end-users, even moderate Internet use of a few hours a week can result in significant long-distance telephone charges.
These long-distance telephone charges confer a significant competitive advantage on a local access provider having a point of presence in a particular telephone exchange area. To compete effectively within that local exchange area, another local access provider would have to locate a point of presence within that telephone exchange area. But locating a separate point of presence in every telephone exchange area would avoid economies of scale that could be enjoyed by providing a centralized point of presence. Moreover, it may be advantageous to locate a centralized point of presence near an Internet interface to minimize the cost of obtaining a physical communication channel between the point of presence and the Internet.
A local access provider can address this long-distance telephone charge problem by purchasing a nation-wide toll-free telephone service from a long-distance carrier. The local access provider can then locate its point of presence in an advantageous location from a physical connection standpoint, and allow end-users to obtain toll-free telephone connections with the point of presence. The cost of the toll-free telephone service is typically rolled into the local access provider's monthly access charges. Virtually any end-user in the United States with telephone service may therefore obtain Internet access by paying a local access provider a negotiated rate for Internet access.
At present, this "all or nothing" option, wherein either an end-user or a third party pays the entire cost of providing the end-user with Internet access, is the only cost-shifting option available. A more flexible allocation methodology for costs associated with Internet access is not currently available. From the commercial supplier's standpoint, this Internet access paradigm presents a significant drawback. Namely, the Internet cannot be used to reach a potential customer that is not willing to pay at least the cost of obtaining Internet access via a local access provider. Many potential customers users therefore remain unconnected, and there is no effective way for a commercial supplier to use the Internet to reach these unconnected potential customers.
This drawback limits the effectiveness of the Internet as a marketing tool because, in some cases, a commercial supplier may be willing to bear the entire cost of communicating with a particular end-user via the Internet. For example, a commercial supplier is typically responsible for marketing costs associated with commercial television advertisements, direct mail advertisements, billboard advertisements, and the like. This commercial supplier may also be willing to pay the entire cost associated with providing a particular end-user with access to its Internet site. This commercial supplier may not, however, be willing to pay the cost associated with providing the end-user with access to other Internet sites, such as those operated by its competitors.
Other Internet site operators may also be willing to bear the entire cost of providing a particular end-user with access to a specific Internet site. A city or county, for example, may wish to provide residents with free access to a web server providing information regarding road closings, weather conditions, emergency services, garbage pick-up, and the like. Similarly, a church may wish to provide parishioners with free access to a web server providing information regarding devotional services, social functions, and the like. Many organizations could similarly make effective use of a selective supplier-paid Internet access regime.
More generally, many advantageous cost allocation methodologies, such as split-cost allocations, time-based allocations, and destination-based allocations would be possible if an end-user's cost of Internet access could be allocated based on various allocation parameters including Internet sites accessed. Thus, there is a need for flexible methods and systems for allocating costs associated with Internet access.